As of this writing the USD/TRY is trading near the 26.82090 ratio with a healthy dose of price action being displayed. Two weeks ago at this time the USD/TRY was trading around the 27.23000 mark when the Central Bank of Turkey initiated a surprise interest rate hike of several magnitudes which sent the USD/TRY lower to a price of nearly 25.22700. Since the 23rd of August, the USD/TRY has climbed higher, but it has done this with measured and calm movement.
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On the 30th of August, the USD/TRY was trading around 26.77175 which is not a huge difference compared to the current price of the Turkish Lira against the USD. The USD/TRY like all other major Forex pairs has also had to deal with the steadfast strength of the USD the past month and a half, as risk-adverse trading has certainly caused a shift in behavioral sentiment. This means the price action of the USD/TRY higher the past couple of weeks cannot be blamed on poor management of the Turkish Lira.
The Central Bank of Turkey’s New Direction and the USD/TRY
After being widely criticized for practicing questionable fiscal and monetary policy, Turkey has managed to begin to change perceptions surrounding the Central Bank of Turkey. Speculators cannot blindly pursue upward momentum in the USD/TRY anymore. Yes, the currency pair has tracked upwards certainly, but its moves higher have been more restrained and they have taken place as the USD has proven it is strong in all of Forex. Meaning that when behavioral sentiment turns positive the USD/TRY may actually show an ability to trend lower.
Global market conditions remain fragile as financial houses are nervous because of shadows looming over the U.S economy as the Federal Reserve has created an ‘air of uncertainty’. Today several Fed members will be speaking at a variety of conferences and their words will affect Forex and the USD/TRY. Traders of the USD/TRY need to remain cautious and use solid risk management.
Near-Term Potential of USD/TRY and Correlation to Larger Forex Market
- The USD/TRY has tracked upwards the past week and it is testing highs as of this writing, Nervous sentiment continues to be created in Forex and speculators may want to pursue conservative buying positions of the currency pair.
- USD/TRY traders need to understand the currency pair has shown the capability to trade lower and appears to be returning to a healthy perception within financial institutions.
- If global markets turn towards risk appetite, this could actually set the tone for USD/TRY moves lower that could be sustained.
- However, betting on a shift to positive sentiment in the near term may prove difficult.
Turkish Lira Short-Term Outlook:
Current Resistance: 26.82510
Current Support: 26.79960
High Target: 26.83400
Low Target: 26.76510
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